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Reshaping buying behavior – Keeping up with Gen Z

Female employee in a warehouse consulting her smartphone

You already know the Gen X and Millennial generations are taking over the workforce and changing the ways
e-commerce and brick-and-mortar retailers do business. Have you wondered how their consumer buying habits are changing the way they buy for work?

Take, for example, industrial products buyers. According to the 2017 UPS Industrial Buying Dynamics Study, the buying preferences of Millennials, Gen X and Baby Boomers are diverging – a lot. One of the more dramatic turns is that Millennials are most willing to shift some of their buying power to suppliers offering mobile apps, user-friendly websites and easy returns. Increasingly, that buying power is making its way to online marketplaces and manufacturers.

That’s happening today. What happens when the post-Millennial Generation takes the reins? Often called Generation Z or the Homeland Generation, these up-and-coming business buyers use their smartphones more and Facebook less than Millennials. They’re also expected to be more demanding customers than their elders.

The question for industrial distributors is, “What are you going to do about it?”

Face rising threats head-on

A decade ago, middle market industrial distributors were just beginning to accept that e-commerce was vital to their success. Today, a growing list of customer demands – and a growing and changing list of competitors – has locked distributors in game of whack-a-mole. With limited time and capital at their disposal, it’s difficult to know where to focus first.

“Every new generation of buyers brings a new set of expectations,” says Matt Guffey, vice president of segment marketing at UPS. “The difference today is that Millennials want and expect a buying experience that’s fast and easy and flexible to their needs at any given moment. That could mean the ability to research products on their phones or order and make returns by chatbot.”

Guffey suggests distributors get a solid grasp of their customer demographics and product needs before making big changes. “It’s important to realize that your customers’ demands are driven by focused areas of engagement and not just their generations,” he says.

Guffey says that while it’s critical to know the generation buyers are in, it’s just as critical to understand the multiple dimensions that influence their behaviors, such as the products they buy or what kind of purchase restrictions they’re facing.

“The types of products someone buys is likely a bigger influence on how quickly they need delivery than anything else,” Guffey says, adding, “Knowing those details about your Millennial and post-Millennial customers will help you place smarter business bets for the future.”

Deliver a convenient (and seamless) buying experience

Those who buy for business are consumers at heart, so it’s only natural that they bring consumer expectations to their workplace purchases. As might be expected, marketplaces have capitalized on that trend with sophisticated websites, wide selections and multiple shipping options.

For example, when 80 percent of buyers say they’re more likely to shift spending to a supplier with a more user-friendly website, a simple refresh of your existing site may not be enough. Sixty-nine percent of Millennials said they’d shift some of their spending to a supplier who offered a mobile application, compared to just 47 percent overall.

Stuart Marcus, vice president of UPS Customer Technology Marketing, suggests that industrial distributors consider incorporating existing technology to make faster improvements. “It’s a rare business these days with IT development experts who have time or staffing to overhaul their e-commerce capabilities,” says Marcus. “But so many of our customers’ businesses rely on e-commerce and e-commerce logistics to stay competitive and grow. The relationships we’ve built with technology providers helps our customers and ourselves.”

Marcus explains that available solutions extend well beyond improving the look or customer-facing functionality. “There are out-of-the-box and configurable solutions that can help to improve order fulfillment, returns and even finance and accounting. And growing demand for mobile channels, especially among Millennials and the post-Millennial generations, means it should be a distributors’ priority as well.

Marcus adds, “To provide the kind of buying experience your customers expect, you need the right technologies, of course, but those technologies have to work well together across all your channels. Anything less will certainly put you at a disadvantage as the new generation of buying leadership takes hold.”

The power of post-sales service and support

When the UPS study was conducted in 2013, 21 percent of 1,500 industrial buyers said they frequently contacted suppliers for post-sales support. In 2017, that percentage jumped to 37 percent.

At the top of the list of post-sales service expectations for buyers of all ages: Returns. However, Millennial buyers’ expectations were higher than all other age groups for services such as Training, On-site Repairs and On-site Maintenance. Consistent with Guffey’s earlier comments, expectations rise and fall depending on the types of products being purchased.

While the results provide an interesting perspective, they somewhat obscure the opportunity: More frequent need for post-sales service and high service expectations provides suppliers a chance to tailor their services to meet unique customer needs.

“Competition has gotten so intense that there aren’t many ways to differentiate yourself from other industrial products sellers,” says Simon Bhadra, senior marketing manager at UPS. “But knowing what types of services your particular customers expect and demand can be an important step toward achieving a level of customer loyalty that seems very elusive these days.”

In fact, post-sale services are so important to 69 percent of Millennials and 56 percent of Gen X buyers that they would shift a portion of their business to a supplier who met those needs.

“There’s a tendency to think that Millennials and post-Millennials are all about the e-commerce experience and nothing else,” says Bhadra. “One advantage distributors overlook is that they may be able to attract a new generation of buyers with post-sales services.” He adds, “Maybe you can’t differentiate yourself with an online buying experience or the most SKUs in the region, but can you stand out by helping them offer easier returns or faster help with repairs and maintenance? The ability to deliver on those needs can be very powerful.”

Find Out More

  • Solutions for industrial distributors

    From warehousing to distribution, UPS has capabilities that allow you to expand customer territories and deliver better post-sales service.

    Find out how UPS can help
  • Strengthen the links in your supply chain

    Gain agility and scale by taking advantage of our logistics expertise, global reach and extensive transportation network.

    Learn more about UPS Contract Logistics
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